Sum Day: How to dole out lump sum retirement

But often overlooked, particularly by the 30 something crowd, is the idea that saving money goes beyond cutting out your cable bill, spending less money on clothing or shopping and not eating out for lunch and dinner all the time.

Those make sense when you’re talking about short term saving as far as that savings account, a fact that eludes most of the population (roughly 50 percent).

This is more about a retirement plan, specifically one that includes such things as a 401K, IRA or pension plan.

The pension is something that is particularly interesting in that you’re faced with a dilemma of sorts financially if you should take the payout as a lump sum or over the course of a longer period of time.

Conventional thinking would tell you that your pension is something you’d want to incorporate on a monthly basis for a variety of reasons. You could easily piece together a budget knowing that you have a number in mind of what you’ll be getting as far as payouts are concerned, such as $1,000 a month means more when you’re trying to figure out how much you have left to pay on your house, mortgage wise or what credit card or debt you have leftover as you think about calling it quits from a working standpoint.

That said, the better option is taking the pension as a lump sum, mostly when you consider the combination of having a 401K or another source of income as a result of retiring and doing so smartly.

When you think about taking your pension in a lump sum, you have to consider that you have much more flexibility with the spending and those large chunks of debt you have will no longer hinder you as you continue to pay on it and the interest for months at a time. That said, you can’t do that to the point that you’re out of money with one fell swoop, thus leaving you with not enough money to retire comfortably and you’ll find yourself having to rethink going back to work.

Decisions abound for certain when it comes to how you want your payout, but the smart money seems to be on the choice that gives you the most financial control possible for a future that won’t include worrying about money as you retire.